Office buildings, bank branches, stores and homes in Italy, Germany and Austria are among the assets the Milan-based company intends to market within two years, according to Paolo Gencarelli, head of its property unit. Austrian sales are expected to generate 1.2 billion euros, he said. “We’re seeing huge interest from international investors, the timing is perfect,” Gencarelli said in an interview in his Milan office. “We expect 220 million euros of savings between 2014 and 2018 from the rationalization of our assets.” European banks and asset managers in 2014 sold real estate loans and defaulted properties with a record face value of 80.6 billion euros, Cushman & Wakefield Inc. said in a Jan. 27 report. Transactions in the region will reach 60 billion euros to 70 billion euros this year, Cushman estimates. In Italy, investment in commercial property rose 30 percent to 5 billion euros last year, according to the brokerage.
UniCredit’s asset sales could boost the company’s capital ratio by as many 14 basis points, assuming a 10 percent capital gain on book value, Equita SIM SpA analyst Matteo Ghilotti said in a note on Tuesday. UniCredit was little changed at 5.57 euros at the 5:30 p.m. close of trading in Milan, giving the bank a market value of 32.7 billion euros.

Reducing Risk
The Italian company’s real estate unit has sold about 4 billion euros of assets since 2008. The new disposals are part of Chief Executive Officer Federico Ghizzoni’s plan to curb risk, reduce assets and cut expenses.
Gencarelli said the bank is expecting non-binding bids for a portfolio of three fully-leased office buildings in the center of Rome by March.

International Investors
“International investors are focused on core assets and this is good timing to bring them to Rome,” Gencarelli said. “We see interest from all the international players, the Anglo-Saxon and Middle Eastern investors and state pension funds.”
Blackstone Group LLP, one of the most active investors in the Italian market in 2014, bought eight properties occupied by government agencies in a sale-and-lease back deal for around 250 million euros in December.
Abu Dhabi Investment Authority, the world’s second-biggest sovereign wealth fund, and London & Regional Properties Ltd. have bid for UniCredit’s former Milan headquarters, offering between 280 million euros and 320 million euros, according to two people with knowledge of the matter. The lender owns 10 percent of Fondo Omicron Plus Immobiliare, the building’s owner.
The Bank of Italy raised its economic-growth forecasts for the country on Feb. 7, citing the effect of the European Central Bank’s plans to buy 1 trillion euros of assets. Prime Minister Matteo Renzi is seeking structural reforms to improve the country’s competitiveness after years of low or no growth.

Austrian Sales
Gencarelli said UniCredit is selling its European Office Fund in Germany as well as its Immobilien Holding portfolio in Austria, which has about 100 assets in prime locations.
“We launched the process to sell assets in Austria last month, sending a memorandum of information to investors,” Gencarelli said. “The portfolio will be sold before the end of the year.”
Morgan Stanley Real Estate is bidding about 1 billion euros for UniCredit’s Austrian assets, Format reported Feb. 6, without saying where it got the information. Officials at the U.S. bank’s London office were not immediately available to comment.

Source: Sonia Sirletti, Sharon R. Smyth; UniCredit Offering Pawn Shop in $3 Billion Property Sale, Bloomberg, (February 16, 2015)